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Hormel Foods Closes $775M Applegate Buyout Deal - Analyst Blog

Zacks Equity Research
Updated

Premium meat products company Hormel Foods Corporation HRL recently announced that it has completed the acquisition of Applegate Farms, LLC (‘‘Applegate’’). The deal is expected to fortify the company’s inorganic growth strategy as well as support its earnings per share by 7–8% in fiscal 2016.

Applegate is a renowned organic and natural meat products company in the U.S. The firm offers premium-quality refrigerated deli meat products, bacons, hot dogs, traditional Italian products, breakfast sausages and other related items in the market. For 2015, Applegate is projected to generate revenues to the tune of $340 million.

The $775-million acquisition deal would enable Hormel Foods to tap the growing market demand for organic and frozen food products among American consumers. Hence, it would support the company’s revenue and margin growth in the near future. However, even after the acquisition, Applegate would operate autonomously as a separate subsidiary of Hormel Foods’ Refrigerated Foods segment.

Hormel Foods is a leading multinational marketer and manufacturer of consumer-branded meat and food products, popular across the world for its innovative strategies and superior product quality. Although the buyout is not likely to impact Hormel Foods’ revenues in 2015, it is expected to boost the company’s earnings per share for fiscal 2016.

Stocks to Consider

Hormel Foods currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include JBS S.A. JBSAY, Sanderson Farms, Inc. SAFM and Tyson Foods, Inc. TSN. All three stocks carry a Zacks Rank #2 (Buy).

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
HORMEL FOODS CP (HRL): Free Stock Analysis Report
 
TYSON FOODS A (TSN): Free Stock Analysis Report
 
SANDERSON FARMS (SAFM): Free Stock Analysis Report
 
JBS SA-ADR (JBSAY): Free Stock Analysis Report
 
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